Case Digest (G.R. No. 76931)
Facts:
Orient Air Services & Hotel Representatives v. Court of Appeals and American Airlines, Inc., G.R. Nos. 76931 and 76933, May 29, 1991, Supreme Court Second Division, Padilla, J., writing for the Court.On January 15, 1977, American Airlines, Inc. (American Air) and Orient Air Services & Hotel Representatives (Orient Air) entered into a General Sales Agency (GSA) agreement naming Orient Air the exclusive general sales agent in the Philippines for American Air passenger services. The agreement allocated two kinds of commissions to Orient Air: a sales agency commission (calculated on sales using American Air ticket stock) and an additional overriding commission of 3% stated to apply to "all sales of transportation over American's services by Orient Air Services or its sub-agents." The contract also contained remittance, default and termination clauses, and made the parties' obligations subject to applicable IATA/ATC rules.
On May 11, 1981 American Air alleged that Orient Air failed to remit proceeds for January–March 1981 (US$254,400.40), terminated the GSA forthwith citing the Agreement's termination clause, and four days later filed suit in the trial court for accounting with preliminary attachment, mandatory injunction and restraining order. Orient Air answered on July 9, 1981, denied nonremittance and counterclaimed, asserting that after proper application for commissions American Air in fact owed Orient Air unpaid overriding commissions and that American Air's termination was improper and prejudicial to Orient Air's business.
The trial court (Regional Trial Court, Manila — Branch IV) found for Orient Air, dismissed American Air's complaint, declared the termination illegal, ordered reinstatement of Orient Air as general sales agent, awarded Orient Air US$84,821.31 (overriding commission) plus additional monthly amounts, exemplary damages of P1,500,000 and attorney's fees of P300,000, and interest. American Air appealed.
The Court of Appeals, in a decision promulgated January 27, 1986 (CA-G.R. No. CV-04294), affirmed the trial court's findings in substance but reduced and modified the monetary awards: it ordered American Air to pay Orient Air specified amounts in US dollars (later modified as to exchange-rate computation), interest at 12% from July 10, 1981, exemplary damages of P200,000 and attorney's fees of P25,000, and taxed costs against American Air. By resolution of December 17, 1986 the Court of Appeals denied American Air's motion for reconsideration and partially granted Orient Air's motion only as to the applicable rate of exchange for conversion.
Both parties separately filed petitions for review on certiorari to the Supreme Court (Rule 45): Orient Air as petitioner in G.R. No. 76931 and American Air as petitioner in G.R. No. 76933. By resolution dated March 25, 1987 the Supreme Court conso...(Subscriber-Only)
Issues:
- Is Orient Air entitled to the 3% overriding commission on American Air's total flown revenue or only on ticketed sales made on American Air ticket stock?
- Was American Air's termination of the GSA valid?
- Could the courts compel American Air to reinstate Orient Air as its...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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